Industry-specific technology and SaaS products are designed to automate everyday busywork and increase efficiency for small businesses (such as our very own Poppy Bridal Software which is designed to help bridal stores operate their business in a central and efficient way).
However, just like every other major business initiative, implementing a new digital infrastructure can be capital-intensive, causing a new dilemma for business owners: how to modernize sustainably. Here are some steps you can take to determine if your business is ready to take on a digital transformation.
Perform a Cost/Benefit Analysis on the Technology
It’s important to determine what the costs and considerations are for procuring technology versus the potential benefits (either quantitative or qualitative). It’s good to make a list of costs associated with procuring technology (such as installation cost, monthly subscription, annual fees, staff training, and hardware maintenance) then write a list showcasing the potential benefits of using this technology (such as increased efficiency, better customer outreach, less headcount, easier scaling, etc) and see if the benefits outweigh the costs. Learn more about undertaking a CBA here.
Our Advice: One important thing to remember is to always try and measure these metrics. Let’s say you believe the new software will increase the number of customers you can serve per day. If so, how many? It’s okay if the forecast is not as precise as you want it to be. Just make sure you have as much empirical data in your assessment as possible so you don’t have to make decisions based on pure anecdotal data (or a hunch)!
This can help you use the same metrics to evaluate the technology once you use it and decide if it was successful in addressing your business needs.
Create a Budget
You have determined that the technology will be beneficial to your business. Next comes determining affordability, and making a financial plan to achieve your goal. Hopefully, you have an accountant or bookkeeper that can provide you with monthly statements of your business. Your monthly statements help you determine your financial health and ability to procure this technology from an accrual and cash flow basis. In previous posts, we’ve discussed cost optimization so making sure procuring technology doesn’t increase your Cost to Revenue Ratio (CRR: Expense as a % of Revenue) to where it becomes unsustainable is essential.
You may identify technology that will increase your future revenue but you might lack the cash to pay for it. That’s where financing comes in. Like any promising business venture, you can use low-cost small business financing to fund your tech procurement. We’ve also previously written about where to look for small business financing, what to look for, and how to prepare which you can check out here.
Set an Onboarding/Implementation Timeline
Your onboarding timeline is an important factor when introducing a new platform. There is a preconceived notion that shortly after procuring technology, we can use it – this is rarely the case. Usually, there is a timeline for onboarding which includes adapting the technology to your business. It is important to take account of installation, setup, activation and training before you can use it. Timelines can vary depending on the complexities of your business and additional factors such as integrated services, such as credit card processing.
During this time, it can be wise to leverage small business funding, especially when your cash position might make it riskier to procure software for your business.
Write a Technology Strategy (Hint: Use your Business Plan)!
Hopefully, all goes well and your business is on its digital transformation journey. However, procuring technology alone won’t set you up for success. Remember: technology is just a tool for you to leverage to help achieve your growth strategy. Check out this article on developing a technology strategy.
Take the time to think about the next year or the next 5 years for your business. What are your plans? How are you going to maximize the technology you have to become successful? Remember that list of benefits you wrote? Track those benefits. Did you get enough business from it? If not, what are the steps you’re going to take to address it?
It’s easy to get lost in day-to-day operations and forget about some of the fundamentals of business. Attending to these fundamentals and evaluating your operations, particularly your technology, can help you grow as a business owner.